Mediation vs. Arbitration

Solving commercial disputes through traditional methods like litigation is challenging, as commercial disputes are

Mediation vs. ArbitrationIntroduction

Solving commercial disputes through traditional methods like litigation is challenging, as commercial disputes are expensive and involve technicalities. For this reason, companies are searching for an alternative to litigation. This is when Alternative Dispute Resolution (ADR) comes into the picture. According to the arbitration law in India, the Alternative Dispute Resolution system holds a successful and well-established place in the country with various mechanisms included in it. An aggravated party can choose from arbitration, mediation, conciliation, or national company law tribunal (NCLT) rather than the traditional method.  Recently, people are inclined to ADR as it is more flexible and, parties can have their terms and conditions. There is a perception among people that Alternative Dispute Resolution is a new concept but in reality, it has been practiced for centuries in various forms in India. For example, in the panchayat system, when the head resolves the conflicts or disputes of the villagers, it comes under mediation. All top law firms consider time more valuable than money, so it becomes appropriate to choose arbitration over dispute resolution through courts. The Arbitration and Conciliation Act 1996 has given more power and scope to ADR in India. However, the mechanisms of ADR are following the footsteps of litigation, as the cost, time, and complexities are increasing everyday. But still, ADR is preferred over the traditional methods. 


Arbitration is regulated and governed by the Arbitration and Conciliation Act, 1996, and section 84 of the Code of Civil Procedures, 1904 in India. It involves resolving a dispute by appointing an arbitrator who is synonymous with a judge and gives out an award called a judgment if it is litigation. To become the best law firm and enter into arbitration, parties must have an arbitration agreement or an arbitration clause in the contract. The parties can freely choose the terms and conditions, like the number of arbitrators, place, venue of arbitration, procedure to follow, laws to follow, and more. Also, the number of arbitrators should be odd. The Arbitration and Conciliation Act 1996 gives a wide scope to arbitration. It not only lays down rules for domestic arbitration but also for international arbitration. Top law firms believe that arbitration is usually preferred more than any other alternative dispute resolution method as it is a more formal method and the procedures are laid down for it. The court cannot be involved in an arbitration matter. The arbitrator has full authority in the arbitration process. The arbitration law in India states that if the parties have an arbitration agreement in place but still go with the dispute to the court, then it can direct the party to the arbitration.


Just like arbitration, mediation is also a dispute resolution mechanism. Mediation is where a neutral third party resolves the dispute and creates a win-win situation. Compared to arbitration, mediation is a less formal method. In mediation, the mediator collaborates with the disputing parties to promote the resolution of disputes rather than deciding a disagreement for them. The duties of a mediator include both facilitation and evaluation. Areness, as the best law firm in India, ensures that when dealing with a conversation between the parties, a mediator should facilitate dialogue between them, regulate interruptions and outbursts from them, and inspire them to reach a mutually agreeable resolution. Mediation enables the parties to play a leading role in dispute resolution through the clarification of the facts of their conflict, the articulation of choices or methods to resolve the issue, and the reaching of a conclusion.  The mediation process in India abides by all common standards for testimony, eyewitness, and cross-examination. Mediation is mentioned in section 84 of the Code of Civil Procedure Act, 1904. The laws of mediation are made easy to comply with. Top law firms dealing in marital and business disputes have successfully used mediation as an alternate dispute resolution method to find a quick settlement that isn’t only effective and economical but also maintains the privacy of the whole disagreement process. The mediation process in India is flexible because it helps disputing parties settle their disputes amicably and lessen the load of open cases in the court. 

Mediation and Arbitration in Commercial Disputes

Commercial disputes include contract disputes, partnership disputes, debt recovery, insurance claims, bankruptcy and insolvency disputes, and many more. There needs to be an effective mechanism to solve these high-level disputes.

Arbitration has become the most favored form of dispute resolution in international commercial affairs. Participants in a commercial transaction choose alternative dispute resolution (“ADR”) processes such as negotiation, mediation, conciliation, and expert decision. After the 1958 United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention), arbitration is still the most popular way to settle international business disputes globally. Still, there are worries about cost escalations, delays, and procedural formality. The global business sector has gradually become less enthusiastic about using international commercial arbitration to resolve disputes. Consequently, top law firms believe that parties are exploring other ways to settle conflicts involving international commerce. Currently, arbitration is getting the work done but it cannot be guaranteed that the same will continue. Within Alternative dispute resolution, there needs to be a mechanism that can be more efficient, and less expensive than arbitration. Even the best law firm recommends mediation on disputes, where the amount is small and there is less technicality as it is less formal than arbitration. For disputes involving millions of dollars, arbitration should be chosen, as the scope for error is less in this.

To conclude, it can be seen that mediation can take over arbitration because it can be seen that the importance of mediation is given in various laws. For example, the insertion mediation and conciliation panel in the Companies Act 2013, mediation in consumer protection bills, etc., and family disputes, in case of divorce.

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